California has a slate of new 2026 laws affecting workplaces throughout the state, and financial services employers will be especially impacted by new requirements. This Insight will not only recap four key legislative changes that you need to take into account but provide a practical summary of the specific ways that you should respond to come into compliance.
State Minimum Wage Increase
The state minimum wage went up to $16.90 effective January 1. But that’s not all.
- The minimum salary for exempt employees rose from $68,640 to $70,304.
- The minimum hourly rate for inside sales exemption went from $24.75 per hour to $25.35
You can read all about it here.
How Will Financial Services Employers Be Impacted?
For financial services employers, this increase will most acutely affect classification decisions and compensation structures for junior analysts, associate relationship managers, compliance staff, and commissioned sales roles.
- Firms that rely on broad exempt classifications should reassess whether salaried employees still clear the new $70,304 exempt salary threshold and meet the duties tests. This is particularly true for roles that blend analytical, administrative, and client-facing work.
- Commission-based positions, including inside sales, business development, and certain product distribution roles, require special attention to ensure pay structures still satisfy the $25.35 hourly minimum and commission-dominant compensation requirement needed to preserve the inside sales exemption.
- Because extended hours are common in finance, any reclassification to non-exempt status can quickly drive overtime exposure, making timekeeping practices, bonus calculations, and payroll systems critical compliance pressure points.
- Firms with operations in high-wage localities or hybrid/remote teams should also confirm that local minimums (such as in San Francisco, Los Angeles, and Berkeley) are properly layered into pay decisions to avoid inadvertent underpayment and wage-and-hour litigation risk.
Stay-or-Pay Ban
Some employers use “stay-or-pay” agreements or Training Repayment Agreement Provisions (TRAPs) to obligate workers to repay costs for training, tuition, or other fees if they leave the job before a specified time. Thanks to a new California law, employers are now prohibited from entering into contracts that require an employee to repay the employer (or a training provider) for certain expenses when ending employment. This only applies to employment contracts entered into on or after January 1, 2026, and does not apply retroactively. You can read all about it here.
How Will Financial Services Employers Be Impacted?
The new stay-or-pay ban has particular significance given the financial service industry’s heavy investment in licensing, credentialing, and onboarding programs, including Series exams, compliance training, proprietary systems instruction, and client-relationship development.
- Employers that have historically used repayment provisions to protect investments in training for advisors, registered representatives, analysts, or specialized compliance roles will need to revisit offer letters, employment agreements, and training policies for California hires starting January 1, 2026, as many common cost-recovery mechanisms will no longer be enforceable.
- This change may require firms to rethink how they structure up-front training expenses, deferred compensation, bonuses, or retention incentives, particularly in high-turnover or competitive talent markets.
- Financial services employers should also ensure national templates are carefully carved out for California employees to avoid inadvertent violations, especially where training is tied to regulatory requirements or professional licensure rather than optional skill development.
Immigration-Related Rights Notification
A new law will soon require California employers to provide written notice to each employee advising of specific constitutional rights when interacting with law enforcement at work, focusing on (but not limited to) immigration rights. It will also require employers to notify the employee’s “designated person” if the employee is arrested or detained at work. And there’s a February 1, 2026, deadline coming up. You can read all about it here.
How Will Financial Services Employers Be Impacted?
This new notice requirement raises unique operational and reputational considerations given the financial service industry’s highly regulated workplaces, security protocols, and frequent interaction with government agencies.
- Employers will need to carefully integrate the required employee rights notices into existing compliance, onboarding, and workplace investigations frameworks without creating confusion about cooperation with lawful audits or regulatory examinations.
- You should train front-line managers, branch leaders, and security personnel on how to handle law enforcement presence in a way that complies with the new law while preserving client confidentiality, data security, and business continuity, particularly in branch offices or trading environments.
- The requirement to notify an employee’s designated person if an arrest or detention occurs at work also means firms must ensure emergency contact records are current, accessible, and handled consistently with privacy and record-retention obligations.
Job Postings Clarification
A new law clarified the rules regarding the kinds of pay-related information that must be included in job postings. Starting January 1, “Pay Scale” is now defined as a “good faith estimate of the salary or hourly wage range that the employer reasonably expects to pay for the position upon hire.” The prior definition left open the question of whether the pay range provided in job postings should include the full potential range. You can read all about it here.
How Will Financial Services Employers Be Impacted?
For financial services employers, California’s requirements are especially impactful given the industry’s frequent use of complex compensation models.
- Employers recruiting for financial advisors, relationship managers, analysts, traders, sales professionals, and similar roles need to ensure postings accurately reflect a good faith estimate of the salary or wage range.
- This requires close coordination between HR, compensation, legal, and recruiting teams, particularly where national job postings are used and California requirements must be layered in.
- Firms should also be mindful that overly broad or generic ranges can attract scrutiny or employee challenges, while overly detailed postings may invite internal equity questions, making careful calibration and documentation critical.
Conclusion
For a full review of all of the new laws impacting California employers, review these Insights:
